self Quiz 1 economics PDF

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compiled self Quiz unit 1 intro to economics...

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Chapter 1 According to the textbook, economics is a: Select one:

a. we will have to give up more and more valuable alternatives to extract oil. b. speculation is likely to drive up oil prices.

a. social science.

c. oil producers are likely to become more greedy in the future.

b. study of business decisions, not social decisions.

d. actually, the Case suggests that oil extraction is likely to become less costly and the future.

c. part of operations and management science. d. part of humanities. The correct answer is: social science.

A/an _______ does not pose the problem of scarcity; one use of the good is not an alternative to another use. Select one: a. free good b. scarce good c. economic good

The correct answer is: we will have to give up more and more valuable alternatives to extract oil.

The opportunity cost of something is: Select one: a. greater during periods of rising prices. b. equal to the money cost. c. less during periods of falling prices. d. what is given up to acquire it.

d. monetary good

The correct answer is: what is given up to acquire it.

The correct answer is: free good

The BEST example of making a choice at the margin is:

Water is considered a scarce good rather than a free good because:

Select one:

Select one: a. it has alternative uses. b. it does not have alternative uses. c. scarce goods are less expensive than free goods.

a. buying a new car. b. quitting your job. c. a coffee drinker drinking another cup of coffee. d. attending college.

d. free goods are more expensive than scarce goods.

The correct answer is: a coffee drinker drinking another cup of coffee.

The correct answer is: it has alternative uses.

The study of a single firm and how it determines prices would fall under:

The Case in Point on the oil extraction suggests that one reason oil may become more costly is that:

Select one:

Select one:

b. microeconomics.

a. macroeconomics. c. the study of inflation.

d. Everyone in the country needs to be covered by national health d. normative economics. The correct answer is: microeconomics.

Each of the following statements about the use of models in the study of economics is true EXCEPT: Select one: a. models fit the observed facts exactly.

insurance. The correct answer is: Everyone in the country needs to be covered by national health insurance.

Chapter 2

b. models are sometimes revised in light of new research findings.

Resources from nature that can be used to to produce other goods and services are called:

c. models are easier to manipulate than the reality they represent.

Select one:

d. models contain the essential features of the economic behavior being studied.

a. money.

The correct answer is: models fit the observed facts exactly.

Suppose you observe that the sun sets every evening after the six o'clock business report. If you conclude that the six o'clock business report makes the sun set, you are guilty of the fallacy of: Select one: a. division. b. composition.

b. natural resources. c. labor. d. capital. The correct answer is: natural resources.

Increasing the level of education in the United States will: Select one: a. shift the production possibilities curve to the left.

c. false cause.

b. improve the level of technology.

d. science.

c. lead to increased natural resource use.

The correct answer is: false cause.

d. lead to workers possessing greater human capital.

An example of a normative statement is:

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Select one:

The correct answer is: lead to workers possessing greater human capital.

a. The rate of unemployment is 4 percent.

Technology is:

b. A high rate of economic growth creates more jobs for the country. c. The federal government spends half of its budget on national defense.

Select one: a. knowledge that can be applied to the production of goods and services.

b. generally unlimited in modern economies. c. a graphical illustration of the alternative combinations of goods and services an economy can produce. d. the resources the economy has available to produce goods and services. Feedback The correct answer is: knowledge that can be applied to the production of goods and services.

A person who seeks to earn profits by finding ways to organize factors of production is called a/an: Select one: a. foreman b. finance capitalist. c. entrepreneur. d. manager. Feedback The correct answer is: entrepreneur.

In this exhibit (Guns and Butter), the combination of guns and butter at point H: Select one: a. can be obtained, but would cost too much. b. cannot be attained given the level of technology and the factors of production available. c. has no meaning since it does not relate to the preferences of consumers. d. Is attainable but would increase unemployment. Feedback The correct answer is: cannot be attained given the level of technology and the factors of production available.

If the production possibilities curve were a straight line sloping down from left to right, this would suggest that: Select one:

a. more of both goods could be produced moving along the curve. b. the two products must have the same price. c. no factor of production has any particular comparative advantage over other

The correct answer is: not possible to produce more of one good without producing less of another good.

In market capitalism: Select one:

resources.

a. factors of production are privately owned and decisions are made

d. the utility of the two goods must be equal to consumers. Feedback The correct answer is: no factor of production has any particular comparative advantage over other resources.

When moving along a production possibilities curve, the opportunity cost to society of getting more of the good on the horizontal axis: Select one: a. is constant. b. is measured in dollar terms.

privately. b. factors of production are owned by the government but decisions are made privately. c. there is no role for government. d. the consumer has few choices to make. Feedback The correct answer is: factors of production are privately owned and decisions are made privately.

c. is measured by the amount of the other good that must be given up.

Government's role of taxing some citizens and transferring income to others is considered:

d. usually decreases.

Select one:

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a. enforcing a legal system.

The correct answer is: is measured by the amount of the other good that must be given up.

b. providing certain goods and services. c. redistributing income.

Efficient production implies that it is:

d. maintaining the money supply.

Select one:

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a. possible to produce more of all goods and services.

The correct answer is: redistributing income.

b. it is possible to produce more of one good without producing less of another. c. not possible to produce more of one good without producing less of another

Chapter 3 good. d. producing at a combination of goods which lies between the production possibilities curve and the origin.

The law of demand implies that:

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Select one:

a. consumers are not responsive to price changes. b. consumers will, all other things unchanged, buy more at lower prices. c. sellers will, all other things unchanged, offer more on the market at higher prices.

After graduation from college you will receive a substantial increase in your income from a new job. If you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger would be considered a/an: Select one:

d. sellers will, all other things unchanged, offer less on the market at lower prices.

a. normal good.

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c. complementary good.

The correct answer is: consumers will, all other things unchanged, buy more at lower prices.

d. inferior good.

b. substitute good.

A decrease in the price of eggs, all other things unchanged, will result in a/an:

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Select one: a. increase in the demand for eggs.

The primary difference between a change in supply and a change in the quantity supplied is:

b. increase in the supply of eggs.

Select one:

c. greater quantity of eggs supplied.

a. a change in quantity supplied is a shift in the supply curve, and a change in supply is a movement along the supply curve.

d. greater quantity of eggs demanded. Feedback

b. both a change in quantity supplied and a change in supply are movements along the supply curve, only in different directions.

The correct answer is: greater quantity of eggs demanded.

c. a change in quantity supplied is a movement along the supply curve, and a

The price of oranges falls. What happens in the market for apples, which are a substitute for oranges?

change in supply is a shift of the supply curve.

The correct answer is: inferior good.

Select one:

d. a change in supply is a movement to the left along the supply curve and a change in quantity supplied is a movement to the right along the supply curve.

a. The equilibrium price falls and the equilibrium quantity rises.

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b. The equilibrium price rises and the equilibrium quantity falls. c. The equilibrium price and quantity rise.

The correct answer is: a change in quantity supplied is a movement along the supply curve, and a change in supply is a shift of the supply curve.

d. The equilibrium price and quantity fall.

If the price of a commodity increases as the result of increased demand, you would expect the:

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Select one:

The correct answer is: The equilibrium price and quantity fall.

a. supply to increase.

b. quantity supplied to increase.

If the price in the market for a commodity is above the market equilibrium price, the:

c. quantity supplied to decrease.

Select one:

d. supply curve to shift to the right.

a. price will remain unchanged.

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b. price will rise to clear the market.

The correct answer is: quantity supplied to increase.

c. quantity supplied exceeds the quantity demanded. d. quantity demanded exceeds the quantity supplied.

In this exhibit (demand and supply curves), the highest price per unit that buyers would be willing to pay for 250 units is:

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Select one:

A market shortage occurs if the:

a. $0. b. $5. c. $10. d. $15.

The correct answer is: quantity supplied exceeds the quantity demanded.

Select one: a. price is above the equilibrium price. b. price is equal to the equilibrium price. c. equilibrium price is above the market price.

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d. equilibrium price is below the market price.

The correct answer is: $10.

Feedback The correct answer is: equilibrium price is above the market price.

In this exhibit (demand and supply curves), a price of $25 per unit will result in: Select one: a. a surplus of 50 units. b. a surplus of 200 units. c. a surplus of 250 units.

Chapter 5

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded does not change, this indicates that, if other things are unchanged, the price elasticity of demand is: Select one:

d. quantity demanded exceeding quantity supplied.

a. 0.

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b. -0.5.

The correct answer is: a surplus of 200 units.

c. -1. d. -2.

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The correct answer is: 0.

The correct answer is: lower prices, greater quantities sold, and lower incomes.

If the price elasticity of demand is found to be -3/4, then demand is: Select one:

In this exhibit (Demand for Bungalow Bob's Bagels) total revenue remains unchanged if the price ________ from ________.

a. price inelastic.

Select one:

b. price elastic.

a. decreases; $0.50 to $0.40

c. unit price elastic. d. positively sloped. Feedback The correct answer is: price inelastic.

If total revenue goes down when price falls, the price elasticity of demand is said to be:

b. decreases; $0.60 to $0.50 c. decreases; $0.70 to $0.60 d. increases; $0.60 to $0.70 Feedback The correct answer is: decreases; $0.60 to $0.50

Select one:

b. unit price elastic.

In this exhibit (Demand for Shirts) the price elasticity of demand for the segment CD is:

c. price elastic.

Select one:

d. positive.

a. greater than 1 (absolute value).

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b. -1.

The correct answer is: price inelastic.

c. -0.71.

The demand for agricultural output is price inelastic. This means that if farmers, taken collectively, have a bumper crop, they will experience:

d. -0.29. Feedback

Select one:

The correct answer is: greater than 1 (absolute value).

a. lower prices, greater quantities sold, and lower incomes.

A demand curve that is perfectly inelastic:

b. higher prices, greater quantities sold, and higher incomes.

Select one:

a. price inelastic.

c. lower prices, quantities sold, and incomes. d. higher prices, quantities sold, and incomes.

a. will be vertical.

b. will be horizontal. c. will be upward sloping. d. has an elasticity equal to 1 everywhere on the curve.

Select one: a. negative; zero b. negative; positive

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c. positive; negative

The correct answer is: will be vertical.

d. zero; negative

If the price of chocolate-covered peanuts increases and the demand for strawberries does not change, this indicates that these two goods are:

Feedback The correct answer is: positive; negative

Select one: a. unrelated goods.

Chapter 7

b. inferior goods.

Which of the following statements is false?

c. substitute goods. d. complementary goods.

Select one: a. The income effect of normal goods counters the substitution effect so the

Feedback The correct answer is: unrelated goods.

The cross price elasticity of demand for Coke with respect to the price of Pepsi has been estimated to be 0.61. If the price of Pepsi falls by 10 percent in a period, how will that affect the demand for Coke in that period, all other things unchanged? Select one:

demand curve is upsloping. b. The income effect and the substitution effect reinforce each other when there are price changes for a normal good. c. The income effect represents the decrease in quantity demanded caused by the implicit change in income due to a fall in the price of an inferior good but not for a normal good.

a. The demand for Coke will increase but by less than 6.1 percent.

d. The substitution effect represents the change in quantity demanded solely due to a change in the relative price of a good.

b. The demand for Coke will increase by 6.1 percent.

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c. The demand for Coke will not change because many people prefer Coke over Pepsi.

The correct answer is: The income effect of normal goods counters the substitution effect so the demand curve is upsloping.

d. The demand for Coke will fall.

For a/an _______ good, an increase in income will lead to an increase in _______ .

Feedback The correct answer is: The demand for Coke will fall.

Although in most cases the price elasticity of labor supply is ________ , for some individuals it may be ________ .

Select one: a. inferior; consumption b. normal; supply

If the price of apples falls and the price of oranges remains constant: c. normal; consumption d. inferior; supply

Select one: a. apples are now relatively cheaper.

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b. the fall in the price of apples made consumers richer.

The correct answer is: normal; consumption

c. the fall in the price of apples, ceteris paribus, makes the marginal utility of apples divided by their price exceed the marginal utility of oranges divided by their price.

Assume that the total utilities for the fifth and sixth units of a good consumed are 83 and 97, respectively. The marginal utility for the sixth unit is: Select one: a. -14.

d. all of the above statements are true. Feedback The correct answer is: all of the above statements are true.

b. 14.

The textbook states that the law of demand:

c. 83.

Select one:

d. 97.

a. is nonsense.

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b. is difficult to verify.

The correct answer is: 14.

c. is confirmed by our real-world experience. d. is not valid in theory. Feedback

In this exhibit (Consumer Equilibrium 1), assume that the price of good X is $2 per unit and the price of good Y is $1 per unit, and you consume 3 units of good X and 3 units of good Y. To maximize utility, assuming that the goods are divisible, you would consume:

The correct answer is: is confirmed by our real-world experience.

Select one:

a. equal prices.

a. less of both X and Y.

b. equal money income.

b. more of both X and Y.

An indifference curve shows combinations of two goods that yield: Select one:

c. equal satisfaction.

c. less of X and more of Y.

d. increasing prices.

d. more of X and less of Y.

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The correct answer is: equal satisfaction.

The correct answer is: less of X and more of Y.

A curve that represents combinations of two goods that yield equal levels of satisfaction is a/an: Select one:

Chapter 8

b. budget curve.

At 36 units of labor, a firm finds that both average product of labor and marginal product of labor equal 42. We can conclude that the average product curve at 36 units of labor is:

c. marginal utility curve.

Select one:

a. indifference curve.

d. price-consumption curve.

a. upward-sloping.

Feedback The correct answer is: indifference curve.

b. downward-sloping.

The marginal rate of substitution assumes that:

c. vertical.

Select one: a. prices remain unchanged.

d. horizontal.

b. money income remains unchanged.

Diminishing marginal returns for the first four units of a variable input is exhibited by ...